Confirmation Bias & Day Trading Process: Constantly Losing? Buying Tops / Selling Bottoms? Fighting? Over Trading?

Are you constantly losing money day trading? Always find yourself buying the top before it reverses or selling the bottom? Do you fight after a few losing trades then revenge trade or over trade? Then once you’ve had your bad day you upload all your data to a trade tracking website or onto excel then try to find something in the data that explains it? After a while, you then decide maybe I should change something, maybe I should change brokers or the classic we see now is start trading options rather than equities. Some traders will be utterly adamant that it's just one issue like their risk or if I can just change this or that.

The issue is probably larger than you think and a lot of the time it's down to Confirmation Bias and lack of a structured process and approach. Yes, we are saying the issue probably is YOU as an individual, unless you're new then we will give you a pass. Your PERSONALITY & PSYCHOLOGY plays a very large part in whether you're receptive to information presented to you. Stubborn in real life, always think your right? Don’t like to be wrong? Starting to think this blog is stupid and doesn’t have the answer you're looking for?

We are all human at the end of the day and all have personality issues or psychological differences. It's fine to be wrong about something but staying wrong can be fatal in this game. What happens if you don’t think you're wrong and think you know what the issue is and you're searching for information to support this. This is called CONFIRMATION BIAS when you're looking for information to validate what you think so you can justify it to yourself.

Maybe you went to university and maybe you didn’t. The core skill that universities teaches students no matter the subject is the ability to find information, validate it, then analyse and think objectively in a dispassionate manner. It's a Process

Therefore, to sum up, Confirmation Bias is when you're looking for something to support an opinion you have that may not be correct but you want it to be.  

A lot of you will be sitting by yourself in a room trading with your own thoughts. You might be asking other traders online their opinion without knowing their background or their ability. Again trying to get them to justify what you think. Your probably trying to make sense of the data you’ve collected to resolve that issue you think you're having . With probably no background in statistics or data analysis to be able to use that data correctly.

how does this relate to Constantly Losing? Buying Tops / Selling Bottoms? Fighting? Over Trading? Because you're highly probably trading something that you got from a Chatroom, Mentor, GURU or someone who you CAN’T VALIDATE. They probably have or had no shared interest in your success and they were just trying to sell you something.

Therefore you probably have no real solid valid approach, no structure to correctly trade and no way to correctly collect catogories and validate the data so it can be used correctly. Then on top of this, you’re probably having emotional struggles due to the lack of structure and due process.   

After all this said we still have traders trying to fight to tell us they are correct and looking for that confirmation. Why? As they invested too much time and emotion for them to be wrong. They are therefore not open, flexibable or teachable.

To finish up, all the issues are strongly related to the fact that everything typically is built on unvalidated information or logic from someone who highly probably can't trade and is selling a service which sounds good and there is no real process or approach.

It would be far easier for TraderEquity to offer what you think you WANT and not what you NEED. We are here with a shared interest to ensure that our traders and our time is well spent in giving traders the right tools to enable them to succeed in this game. We only work with partners who we believe have a shared and valid interest in their success. Remember TraderEquity isn't offering a service but a chance to work with us to trade our capital as an independent contractor.

Happy Trading!


Published 30/05/2019

Please Note: We can NOT accept any US-based traders, this restriction is based on their location rather than their nationality and we can NOT accept any Canadian based traders directly.


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